OECD standardization in Global governance
In an international organization, the countries within it have significant interests, utilizing the international organization to achieve their objectives. Undoubtedly, the power of international organizations plays a role in the production, legitimation, and application of knowledge in any aspect useful for the global order, shaping globalization with interactions among policymakers (countries) igniting a pull of interests among them to become more interconnected, ultimately to achieve economic interests. OECD plays an important role in the development, standardization, and dissemination of transnational policy ideas where OECD conducts research and produces numerous studies based on various disciplines, predominantly economics, accompanied by organizational discourse (Mahon and McBride 2009).
In some terms, the OECD is often referred to as the “club of the rich” or even a joint apparatus of states because it was formed during the heyday of Keynesian welfare states when the transnational governance system was uneven, incomplete, and contested. In such conditions, the OECD, initially focusing on coordination among its members, shifted focus to forming “best practices.” As the post-war transnational order began to stabilize, OECD changed the geopolitical direction by expanding its membership, initially comprising Japan, Australia, and New Zealand, but moving to include former members of the Soviet bloc and the most famous ‘Asian tigers’ such as South Korea. With its widening expansion, OECD aims to become a ‘globalization hub’ by continuously increasing its membership and enhancing the involvement of influential states in the global order such as Chile, Estonia, Israel, Russia, Slovenia, Brazil, China, India, Indonesia, and South Africa (Mahon and McBride 2009).
Although the OECD’s power does not extend to creating binding obligations like the World Trade Organization (WTO) and the World Bank, the OECD plays a significant role in the development and dissemination of transnational research and policy ideas covering various contemporary issues, including digital transformation, which plays such a central role in the current global order. Ideas within the transnational scope help understand modern state interests by setting rules to govern state behaviour in achieving their interests. These ideas are endorsed by the OECD to help identify problems and design various ‘best practice’ solutions (Mahon and McBride 2009).
In the digital era where information can be transferred without territorial boundaries, supporting globalization, many states are now establishing national boundaries to have their territory in technology usage, with strong implications for the economy, as done by the European Union and the North American Free Trade Agreement. Meanwhile, other countries prefer openness over restriction, especially for developing countries, where they do not have as much power in determining technology usage territory and trade practices, rather they need platforms for expansion, but economically advanced countries tend to restrict. OECD appears as an inquisitive and meditative party (Mahon and McBride 2009) .
Meditative activities tend to classify, assign meanings, and disseminate norms, while the inquisitive process, related to peer review, involves exercising monitoring power and creating pressure on states to adapt to new standards and practices. OECD introduces internal expert staff to carry out the inquisitive process and meditative activities, not to eliminate the state’s role as a central actor but to assess all their actions in achieving interests based on best practices and provide the best policy recommendations to them during meditative activities, especially in this digital era where many non-state actors are involved. Unfortunately, the OECD lacks the power to enforce, it leverages moments when states have significant interests, presenting various attractive offers (Mahon and McBride 2009).
Although OECD’s role is not coercive, when a country joins as a member, it must adhere to the rules within it, such as Article 3 requiring member states to provide the organization with the necessary information to fulfil its tasks. This compliance commitment forms the basis for regular statistical collection and compilation into reports such as the Economic Outlook. These commitments are solely to monitor the economic performance of member states, already agreed upon by its members (Mahon and McBride 2009). The flexible dynamics within OECD reflect its adaptation to the technological and modern era where the coercive nature of rules is classical, the push for openness rather than restriction for each actor to formulate appropriate policies, but with strict supervision through member agreements, making OECD a safe and comfortable avenue to achieve interests, involving not only state actors but also non-state actors. Instead of eliminating the coercive nature, it changes the way rules are made to minimize unilateral decisions.
Political dynamics occurring within OECD membership
OECD plays a subtle role in influencing the governance of a country, as it differs from the International Monetary Fund (IMF), World Bank, and WTO, both of which have absolute roles in global economic governance. OECD, which is flexible and independent in regulating governance in various fields, equipped with internal resources experts in their fields, provides joint policy recommendations for its members. However, often there are overlapping interests among its members which become obstacles, especially for economically strong countries (Eccleston 2011).
OECD, with a vision of economic liberalization, is an international organization adhering to neoliberalism, where all state actors have the right to access markets to promote economic growth in their countries. However, the challenge for the OECD arises from various regulations from its member states that need to be harmonized as standards applied by the OECD. Certainly, not all non-members can follow OECD standards, but will OECD change its standards so that the countries it desires can join OECD? Especially when hegemonic countries like the United States support the entry of such countries into OECD membership, as the US did with Indonesia (Shofa 2024).
OECD provides a platform equipped with standards to create fair economic competition and free markets accessible to its members. This platform is established both before and after OECD accession for prospective members, aiming to ensure that interactions among OECD members create fair economic competition, as was done in Argentina, Brazil, and Peru, all of which had important economic and environmental issues to address to join OECD (AQ Editors 2022).
OECD on Indonesia’s Data Governance and Response
Indonesia, with a vision of becoming a golden Indonesia by 2045, is important for Indonesia to address data governance issues to support its digital economy, and recently Indonesia plans to become part of the OECD. OECD, in data governance, has a role to help policymakers address data governance issues by developing, revising, and implementing data governance policies in the digital era (OECD, n.d.). In the data governance guidelines offered by the OECD, the OECD promotes openness and data control by prioritizing trust, managing overlapping interests and regulations potentially conflicting in data governance, and encouraging investment in data governance. OECD approaches this nationally and internationally among its members, where these guidelines can be implemented nationally and internationally. Policy formulation is certainly assisted by highly competent staff in their field. This statement reflects the rules of the platform created by the OECD when becoming a member.
Indonesia, which is reportedly going to become an OECD member, raises questions about the process of becoming a member and when already a member. The process of becoming a member involves many issues that Indonesia must address to meet OECD standards, and currently, Indonesia only meets 15 OECD standards (Antara News 2023), even though Indonesia already has the Personal Data Protection Law (UU PDP) as its data governance. Indonesia’s proximity to OECD members like Australia is an advantage for Indonesia to expedite the process of becoming a member and to create a positive image when already a member (Hirawan and Teguh 2023). Indonesia must continue to increase its activity internationally while improving its national structure. If Indonesia becomes an OECD member, Indonesia will benefit in terms of access, including data governance. Access to cross-border data cooperation, where later trade will be more open through digital means, access to knowledge and technology transfer, access to investment for improving Indonesia’s digital infrastructure, and most importantly for the improvement and enhancement of data governance regulations such as for the UU PDP.
The role of international organizations in data governance is crucial, and joining them becomes the best option because currently, many countries practice data governance protectionism, which will hinder the chances for developing countries to advance and widen the gap. International organizations open access for developing countries and provide platforms in data governance, although they must meet standards first. In the OECD, Indonesia not only achieves interests related to data governance but also in the digital economy.